SCHEDULE 13Discounted securities: income tax provisions
Excluded indexed securities
13
(1)
For the purposes of this Schedule a security is an excluded indexed security if the amount payable on redemption is linked to the value of chargeable assets.
(2)
For the purposes of this paragraph an amount is linked to the value of chargeable assets if, in pursuance of any provision having effect for the purposes of the security, it is equal to an amount determined by applying a relevant percentage change in the value of chargeable assets to the amount for which the security was issued.
(3)
In sub-paragraph (2) above the reference to a relevant percentage change in the value of chargeable assets is a reference to the amount of the percentage change (if any) over the relevant period in the value of chargeable assets of any particular description or in any index of the value of any such assets.
(4)
In sub-paragraph (3) above “the relevant period” means—
(a)
the period between the time of the issue of the security and its redemption; or
(b)
any other period in which almost all of that period is comprised and which differs from that period exclusively for purposes connected with giving effect to a valuation in relation to rights or liabilities under the security.
(5)
If—
(a)
there is a provision which, in the case of the amount payable on the redemption of any security, falls within sub-paragraph (2) above,
(b)
that provision is made subject to any other provision applying to the determination of that amount,
(c)
that other provision is to the effect only that that amount must not be less than a specified percentage of the amount for which the security is issued, and
(d)
the specified percentage is not more than 10 per cent.,
that other provision shall be disregarded in determining for the purposes of this paragraph whether the amount payable on redemption is linked to the value of chargeable assets.
(6)
For the purposes of this paragraph an asset is a chargeable asset in relation to any security if any gain accruing to a person on a disposal of that asset would, on the assumptions specified in sub-paragraph (7) below, be a chargeable gain for the purposes of the M1Taxation of Chargeable Gains Act 1992.
(7)
Those assumptions are—
(a)
where it is not otherwise the case, that the asset is an asset of the person in question and that that person does not have the benefit of any exemption conferred by section 100 of that Act of 1992 (exemption for authorised unit trusts etc.);
(b)
that the asset is not one the disposal of which by that person would fall to be treated for the purposes of income tax as a disposal in the course of a trade, profession or vocation carried on by that person; and
(c)
that chargeable gains that might accrue under section 116(10) of that Act are to be disregarded.
(8)
For the purposes of this paragraph neither—
(a)
the retail prices index, nor
(b)
any similar general index of prices published by the government of any territory or by the agent of any such government,
shall be taken to be an index of the value of chargeable assets.